I recommend getting a few inspection first, before making that determination. For example, you could get a home inspection and a pest inspection. The two resulting reports would tell you about any termite damage, dry-rot or fungal damage, any potential problem areas (structurally), as well as the functionality of the plumbing, wiring, heating?and all appliances.
Selling as is or trying to compete with average to good condition homes is a big decision that will affect your overall success. If your home is less than 2000sqft, you should be able to get both of these inspections for less than $800, and they will give you a pretty accurate picture of what you have to work with. This will make that decision a lot easier to make!
David
Source: http://www.zillow.com/advice-thread/what-should-we-do-to-sell-a-home-that-has-had-very-little-upgrading-from-it's-original-1940's-constr/470152/
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